Oil surges 3% as US-Iran strikes revive Hormuz supply fears

Oil prices climbed sharply Thursday after American forces carried out new strikes inside Iran and Tehran responded by targeting a US airbase. Brent crude futures rose nearly 3 percent to around 97 dollars a barrel while West Texas Intermediate gained about the same amount to top 91 dollars. The moves followed reports that US aircraft hit an Iranian military site viewed as a threat to shipping lanes in the Strait of Hormuz. Iran’s Revolutionary Guards said they struck back at a US installation shortly after 4:50 a.m. local time though they gave no precise location for the base.

Markets reacted quickly to the renewed fighting. S&P 500 futures slipped 0.2 percent in early trading while Nasdaq futures fell a bit more. The Dow futures also edged lower. Traders pointed to the oil rebound as one factor weighing on equities after the previous session had seen crude prices ease on talk of diplomatic progress. Energy costs have already started feeding into broader inflation readings and some analysts warned that further spikes could keep central banks from easing policy anytime soon.

The latest American action came after weeks of mixed signals from Washington. Secretary of State Marco Rubio had told a cabinet meeting that negotiations with Tehran were moving forward and that the administration still favored a diplomatic path. President Trump had also said he would not permit Iran to maintain control over the Strait of Hormuz in any final agreement. Iranian state media had claimed Tehran would restore normal commercial traffic through the waterway within a month of reaching a deal. Those comments briefly calmed traders on Wednesday but the fresh strikes reversed the mood.

The Strait of Hormuz remains the critical chokepoint for roughly one fifth of global oil shipments. Any sustained disruption there would hit American drivers and manufacturers first through higher pump prices and rising input costs. Past episodes have shown how quickly those increases spread into everything from groceries to airline fares. With inflation already a live concern for the Federal Reserve and other central banks the timing of the latest escalation adds another layer of pressure on household budgets.

Citi analysts noted in a recent note that markets had been trying to price out the worst supply shock scenarios as talks appeared to advance. Yet they also cautioned that uncertainty around any final agreement keeps policymakers on edge. The prolonged climb in crude has begun to produce secondary inflation effects that some central banks are now treating more seriously. That dynamic leaves little room for error if tensions in the Gulf keep flaring.

The back and forth between strikes and counter strikes raises familiar questions about how the United States became locked into another round of Middle East conflict. Official statements continue to stress protection of commercial shipping and deterrence of Iranian threats but the pattern of action and reaction has not delivered lasting stability. American service members and taxpayers bear the direct costs while consumers nationwide feel the price effects at the pump. With talks reportedly close to progress only days earlier the decision to launch fresh attacks has left the situation more volatile rather than less.